Canadian regulators are holding hearings about a controversial (and currently …

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It looks like Canada's telecom regulators are showing some new-found skepticism about metered or "usage-based" billing (UBB). The Canadian Radio-television and Telecommunications Commission (CRTC) has been holding hearings over the last few days about its controversial (and for the moment suspended) move to let Bell Canada bill independent ISPs on a wholesale byte-by-byte basis.

Newspaper reports suggest that at least some of the commissioners aren't buying arguments that the telcos need UBB to "discipline" consumers so that they won't congest networks with excessive downloading.

"No single user or wholesale customer is the cause of congestion," Bell vice-president Mirko Bibic explained to the CRTC at the event. "But clearly, wholesale users contribute a disproportionate share of total traffic, and by extension, congestion."

This did not impress CRTC Vice Chair Len Katz. "When I took a look at your forecast over the next five years, (Internet traffic) growth seems to have curtailed," he challenged the telco. "Am I missing something here?"

CRTC commissioners also asked why Bell and other big ISPs couldn't just negotiate with the indie ISPs on their own. When they responded that they did, CRTC Chair Konrad von Finckenstein reportedly cut into the discussion, noting that requests for access to Bell's newer and faster networks have been denied.

"Don't tell me you are the great benefactor of ISPs you tried to resist," von Finckenstein declared.

Myths before lunch

Canadian telecommunications advocate Michael Geist has been following the hearings as well. "By the time lunch rolled around, it was clear that claims that usage based billing practices are a response to network congestion is a myth," Geist wrote about Monday's discussions.

CRTC Chair Konrad von Finckenstein asked why—if Bell was facing network congestion—sister company Bell Aliant has not implemented UBB. Bell argued that Bell Aliant "supported" UBB, but acknowledged that competitive forces and marketplace conditions in Atlantic Canada were such that UBB is currently not needed. Of course, von Finckenstein didn't need to look at Bell Aliant as his example—Bell itself employs different caps in Ontario and Quebec given the different competition from Videotron and Rogers. Their approach isn't a function of congestion, but rather competition. In fact, when Bell was asked whether it planned to keep data caps for its retail customers, it responded that it did, subject to "competitive dynamics." The effects of competition were further confirmed when Telus noted that it doesn't use UBB, it isn't a pressing issue, and that competition with Shaw has led to far more generous plans than those found in other parts of the country.

This event follows a long and controversial debate about UBB. The fight went into high gear when the CRTC acceded to telco requests last September, granting them the right to charge indie ISPs on a metered wholesale basis (plus a 15 percent discount).

But in January, one of the indies published its new rate schedule just before the policy was about to go into effect. This included data caps that dropped from 200GB to 25GB in exchange for monthly rates that jumped by about CAN$10 a month.

The yogurt hit the fan. Over a third of a million people (around one percent of Canada's population) signed openmedia.ca's petition against wholesale metered billing. With all of Canada's top parties raising hay about the matter, and elections approaching, Canada's conservative Prime Minister Stephen Harper got the memo. The government told the CRTC to suspend the decision—or have it done for them from above.

This is a "bread-and-butter issue," an unnamed senior official told newspapers. The CRTC's von Finckenstein quickly assured everyone that it would be done, but also insisted that he saw UBB as a way to "discipline the use of the Internet." Companies like Netflix are "putting a great stress on the Internet, and there's no incentive for companies to invest in maintaining the Internet," the regulator warned.

"I'm an unemployed 50-year-old single father with a son and future daughter-in-law and a granddaughter to support and it gets harder every day," one wrote to the agency. "There must be something done to guarantee the Internet which I would now liken to an essential service."

New pricing models

No surprise then that the Commission is now approaching this matter gingerly. So are the ISPs, it seems. In his opening statement at the hearing, von Finckenstein disclosed that they've proposed "new pricing models." Reported compromises on the issue include a Bell plan in which smaller ISPs would be hit with an "aggregate" use charge—presumably a tithe based on their collective data use rates. The indies have countered with a deal in which they would pay a special maximum capacity peak time rate.

"As we understand [the big telco] proposals," they "do not force independent ISPs to implement download limits or include additional charges based on the usage of their individual customers," von Finckenstein explained. That's nice, but strictly speaking, neither did the CRTC's decision in September.

Where is this going? "As part of this proceeding, the Commission will make a final determination on the rates for wholesale residential high-speed access services," von Finckenstein disclosed. "The interim rates we recently set will remain in effect until such a time as the Commission renders its decision, which could include retroactive adjustments."

One thing is for sure, the CRTC's Chair insists that the agency will not look at retail prices. "We believe that retail rates (i.e. the prices charged by ISPs to consumers) are best set by the market," he added.

That's a problem for critics of metered billing who say that the Commission needs to go further and take a look at UBB and data cap plans directly applied to consumers.

"Since the CRTC refused to extend the hearing to retail usage based billing issues, I suspect the outcome will be anti-climatic," Geist predicts. "There may be some new rules for wholesale UBB (which will only serve to demonstrate how badly the CRTC has bungled this issue), but the broader data cap issues will remain unchanged for now."

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Matthew Lasar
Matt writes for Ars Technica about media/technology history, intellectual property, the FCC, or the Internet in general. He teaches United States history and politics at the University of California at Santa Cruz. Emailmatthew.lasar@arstechnica.com//Twitter@matthewlasar